The chairman of the Senate Finance Committee, U.S. Senator Max Baucus, D-Mont., is expected to introduce legislation this week to end billions of dollars in federal government subsidies for the five largest oil and gas companies as they report huge first-quarter profits amid high gas prices. Baucus spokeswoman Kathy Weber says the plan could end up saving tens of billions of dollars, a portion of which would be invested in increasing production of cleaner and cheaper domestic fuel and providing incentives for buying fuel-efficient vehicles.
"Now is not the time to stand idly by while large oil and gas companies get billions of dollars in tax breaks," Baucus said.
The Montana Democrat said his proposal would eliminate a manufacturing deduction that companies are now allowed to make, and reduce a tax credit for royalty payments the companies make to foreign governments. The plan also would create an excise tax on certain Gulf of Mexico leases. Other details are still being worked out.
Baucus's plan follows President Barack Obama's call for Congress to end unwarranted tax breaks to oil and gas companies. Lawmakers have offered opposing plans to respond to consumer discontent over rising gasoline prices, with Democrats focusing on alternatives to oil and Republicans pledging to give companies more offshore access.
House Republicans plan to vote on legislation requiring the Interior Department to approve or deny production permits within 60 days. A second bill backed by House Republicans would require the Interior Department to lease areas in the western and central parts of the Gulf of Mexico and off Virginia's coastline.
In response, Growth Energy CEO Tom Buis said that rolling back the enormous tax breaks, subsidies and giveaways that global oil and gas companies get every year would begin to level the playing field and allow renewable, affordable ethanol to compete in the open market. Buis added that Congress should investigate these publicly-funded subsidies for global oil companies and throw some light on what are really the hidden costs of oil.